Facebook Acquires WhatsApp in $19billion Deal

In what is unarguably a consolidation of its dominance of the social media platform, Facebook has announced the purchase of the mobile messaging service, WhatsApp in a $19bn deal that represents the social media company’s biggest acquisition yet.

Mark Zuckerberg, the founder of Facebook, described five-year-old WhatsApp as an “incredibly valuable” service that was well on its way to connecting 1 billion people around the world.

Bloomberg is reporting that the agreement includes $12 billion in stock, $4 billion in cash and $3 billion in restricted shares, according to a statement by Facebook yesterday.

The acquisition is the largest Internet deal since Time Warner’s $124 billion merger with AOL in 2001, according to data compiled by Bloomberg. WhatsApp has more than 450 million members, with 1 million users being added daily.

WhatsApp has more than 400m users around the world and claims it is adding more than 1 million new registered users a day. It allows unlimited free text-messaging and picture sending between

users and is among the world’s most downloaded mobile apps. Facebook’s successful bid comes after Google reportedly made a $1bn offer for the company last year.

Facebook Chief Executive Officer Mark Zukerberg, who bought photo-sharing service Instagram for about $700 million in 2012, has been adding applications such as messaging and news to court smartphone and tablet users.

WhatsApp, which would be the company’s biggest acquisition, competes with apps from Twitter Inc., Kik Interactive Inc. and Snapchat Inc., the photo-message startup that rebuffed a $3 billion Facebook bid last year.

“WhatsApp is on a path to connect 1 billion people. The services that reach that milestone are all incredibly valuable,” said Mark Zuckerberg, Facebook founder and CEO. “I’ve known Jan [Koum founder and CEO] for a long time and I’m excited to partner with him and his team to make the world more open and connected.”

Koum said: “WhatsApp’s extremely high user engagement and rapid growth are driven by the simple, powerful and instantaneous messaging capabilities we provide. We’re excited and honoured to partner with Mark and Facebook as we continue to bring our product to more people around the world.”

WhatsApp is particularly big in Europe and Latin America where its market penetration is thought to top 80% in countries including Brazil, Germany, Portugal and Spain.

Last year Facebook made an unsuccessful $3bn bid for SnapChat, a service that sends messages that erase themselves after a short period. The social media firm is making the move as WeChat, owned by China’s Tencent, is rapidly building its service in the west.